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Hydrocarbon contracts to be signed next week

By Chryssa Liaggou

The countdown has started for hydrocarbon drilling in northern and western Greece as the open-door concession of the areas for surveying and utilization will be sealed on Wednesday with the signing of the contracts.

Drilling will start inland at Ioannina in northern Greece and offshore in the Patraikos Gulf and off the coast of Katakolo in western Greece, with total retrievable reserves estimated at 250-300 million barrels of oil, following 15 years of inactivity in the promising domestic hydrocarbons market.

The tender for the concession of the three areas started some 30 months ago and as the Energy Ministry announced on Thursday, the contractors will sign the concession documents on Wednesday in the presence of Prime Minister Antonis Samaras and Deputy Prime Minister Evangelos Venizelos. According to the assessment committee’s recommendation to the ministry, the contractors are the consortium of Energean Oil with Petra Petroleum for Ioannina, the consortium of Hellenic Petroleum with Edison and Petroceltic for the Patraikos Gulf and the consortium of Energean Oil with Trajan Oil & Gas for Katakolo.

The global oil market has been closely monitoring local developments and the signing of the contracts for these regions will represent the first positive signal ahead of the expected major round of concessions in the Ionian Sea and south of Crete in June.

The government has high expectations regarding the revenues that will come from the utilization of the country’s hydrocarbons, which should benefit the country as a whole. State revenues will come from the 25 percent tax and the lease rate that will be based on the level of production, the geographical and geological structures of each region, and the revenue-expenditure ratio.

According to calculations the ministry published on Thursday, the total state revenues from oil reserves of 100 million barrels would amount to 6 billion euros. For every new job in the hydrocarbons sector, a total of 3.2 full-time jobs would be indirectly created in the broader economy, and for every euro that employees in the sector received, another two euros would be created for employees in other economic sectors.

The contracts will provide for a binding minimum program of works for every phase of the process as well as a minimum financial commitment for the implementation of those works by the contractors, through a letter of guarantee issued to the Greek state, according to the ministry.